Author Question: Hyper Retail Outlets sell goods on terms of net 40. The store's average monthly sales (all on ... (Read 160 times)

cdr_15 · **on:** Jul 10, 2018

Hyper Retail Outlets sell goods on terms of net 40. The store's average monthly sales (all on credit)
are 70,000.

Hyper pledges all of its receivables to the bank, which advances 80 of the face value
of the receivables at a rate of 2.5 above prime. The bank also charges a 1 processing fee on all
receivables pledged. Hyper borrows the full amount possible, and the current prime rate is 5.
What is the annual percentage rate (APR) of using this source of financing for one full year?
A) 23.5 B) 21.8 C) 22.5 D) 19.1

Question 2

Mammoth Mart's common shares are currently trading for 59.85 and the company paid its annual dividend of 0.60 per share.

If your required rate of return is 12, what is the implied growth rate in dividends? (Assume that dividends are expected to grow at a constant rate in perpetuity.)
A) 1.00
B) 8.46
C) 10.89
D) 11.00
E) 11.46

isabelt_18 · **Reply #1 on:** Jul 10, 2018

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